The head of Microsoft Ireland says Ireland could become a global leader in cloud computing, but only if the country seizes the initiative and gains first mover advantage over rivals.

He said Ireland needed every advantage, including low corporate taxes, to compete for foreign investment.

Microsoft Ireland MD Paul Rellis was addressing an audience of 120 business leaders at a Dublin Chamber of Commerce members' briefing at the Four Seasons Hotel in Dublin.

The US, India and Singapore are also among the countries that might emerge as leaders in the field, he said.

Mr Rellis, who is a board member of the American Chamber of Commerce in Ireland and IBEC, said that the 12.5pc tax rate, under threat from Europe, was one of the tools Ireland has for attracting Foreign Direct Investment. Every tool was important, he said.

Mr Rellis called on the next government to boost the rapidly developing cloud computing sector by creating a dedicated state agency to attract talent to Ireland and to promote the state as a pioneer of the technology.

Cloud computing refers to the trend away from users buying their own IT systems and towards a model of tapping into capacity supplied by third parties. Microsoft is increasingly moving away from a model of selling licences to use its software and towards becoming a service provider, selling ongoing IT services to business clients.

Mr Rellis compared the trend to the move from factories generating their own power to the growth of power companies providing electricity as a utility to be used at will.

Start-ups

Mr Rellis wants a new agency to attract high-potential start-ups to Ireland from all over the world. He said talent should be identified and incentivised to develop their ideas and technologies here.

Ireland is already ahead in terms of the data centres that underpin the move to cloud computing, including a US$500m (€368m) Microsoft site in Dublin.

However, Rellis warned that data centres generated few jobs.

He said jobs would come from companies, including foreign start-ups, developing new products that allowed customers to take advantage of the shift to outsourced IT.

He said that in an era of cost-cutting the incoming government should become a pioneer user of cloud computing in the public sector to radically cut IT costs and as a showcase to the world.

Mr Rellis cited the example of the Central Applications Office of the Department of Education. He pointed out that the CAO needs huge IT resources to cope with extremely high usage "one week every year".

A shift to cloud computing would mean service providers like Microsoft could sell the CAO IT capacity on a per-use basis, instead of having an expensive system underused for 51 weeks of the year.